The following is a rush transcript of the July 13, 2010, edition of "Special Report With Bret Baier." This copy may not be in its final form and may be updated.


WHITE HOUSE PRESS S ECRETARY ROBERT GIBBS: The political numbers change when -- when the numbers of unemployed Americans decreases and that's what the president is focused on.

There isn't a website in the world that doesn't have a new poll every day. And if you spend a lot of time sitting around worrying about polls rather than worrying about the people that you're trying to help, I'm sure you'd get discouraged. But we are too busy to sit around looking at polls.


BRET BAIER, ANCHOR: But there are some new polls out. And they're coming out on a day when the numbers came out about the federal deficit. Only nine months in to the fiscal year the U.S. government has federal deficit topping $1 trillion already.

Now, about the political implications of all of this, when asked in the ABC News/Washington Post poll which party do you want to be in charge of Congress? Republicans at 51 percent, Democrats 43 percent. Other numbers in that poll showed a decline in confidence about how the Obama administration is handling the economy.

What about all of this? Let's bring in our panel: Steve Hayes, senior writer for the Weekly Standard, Erin Billings, deputy editor of Roll Call, and syndicated columnist Charles Krauthammer. Charles, they said -- the White House press secretary said -- they are not discouraged, but there is a lot of talk about the latest numbers and what they mean.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Well, he also says they are way too busy to sit around looking at polls. You know, they say a diplomat is a gentleman who is sent abroad to lie for his country. The press secretary is an exception, he stays home and does it.

Obviously, these guys are worried about the polls. As you said, there is a generic poll where Republicans are ahead by seven points, which is a huge spread, I think it's historic. When you consider that registration in the United States, Democrats have about a seven-point advantage over the Republicans, this means there is a huge swing in independents. That is what is happening here.

On Obama, himself, no confidence up to about 60 percent. His numbers are way down. But what is really interesting is on the economy. On the economy people disapprove of him over those who approve, about a spread of 10 points.

But even more interesting is the intensity. Of those who approve, about half, strongly approve of Obama's handling the economy. Of those who disapprove, three-quarters strongly disapprove.

The economy is his Achilles heel. And ironically, of all the measures of Obama, the one of which he has the most public support is as commander-in-chief I think in part because of how decisive he was in the McChrystal affair. And even though Afghanistan is not a popular war, it's very interesting that the one element in which you show leadership people will support you, even if they have doubts about the policy.

BAIER: This week, Erin, the chamber of commerce, there will be a big summit about the business leaders. They have their own polls they're pointing to, independent surveys, the Lombardo survey. "How concerned are you about the recent growth of government?" This is small business owners -- concerned, 80 percent. Next question, "Does the Obama administration have a clear plan for creating jobs?" Does not have a plan, 57 percent. Those are small business owners.

Now listen, polls can shift day-to-day, but these seem to be trending in a way that doesn't look good for the administration.

ERIN BILLINGS, DEPUTY EDITOR, ROLL CALL: Well, I think that's why we are hearing such a move right now to help small businesses. I mean they're looking at these polls. They may say they're not. But look, Robert Gibbs is on the Sunday shows saying we could lose the House here. Well, how do you think he knows that? He is looking at polls.

You know, look, the economy is the biggest issue. It has been the biggest issue. The public, small business, it doesn't matter, people don't feel like seeing address quickly enough. And it's hurting Democrats. And it is hurting Obama. He's just lucky he is not on the ballot this November.

BAIER: Steve?

STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: It's one thing for the White House to dismiss polls. They do it all the time. They all look at polls. They have their own pollster out of the DNC and they're crunching numbers every day and they're obsessed with polls.

One number they can't dismiss, I find this interesting -- I was in Toledo, Ohio, this past weekend reporting a piece for The Weekly Standard, and I got in the numbers in Lucas County, which is typically one of the counties in which presidential candidates in each of past two cycles spent the most money per capita.

And if you look at what happened May 4, the primary in Ohio, party switchers Republicans to Democrats, 392 voters went from Republican Party to Democratic Party. Democrat to Republican -- 3,743 voters switched. So that is a 10-to-one advantage of party-switchers from people going from Democrat to Republican. That is a staggering number.

And if it's representative -- and Lucas County has been representative in the past, it's a county that Obama won 64 percent to 35 percent -- so that should have the White House very concerned.

BAIER: Charles, we focus a lot on the polls. And obviously there is a lot of time before November. You have said Republicans have had some missteps that have taken the focus off the ball here.

But when you have the White House press secretary, Robert Gibbs, going out and saying the House could do to Republicans, a lot of Democratic response to that, what do you see as far as the White House reaction to this?

KRAUTHAMMER: Well the White House attempt -- if you listen to the president on the stump this week, if it's a referendum Obama, Democrats will do really badly. They want to make at it choice. Obama will always say do you want guys that drove us into a ditch? Redo their policy starting, and he wants to make the Republicans the villains. He wants a choice between the Republicans and Democrats.

The problem is it's not going to work. After two years, Bush is a memory and he is an excuse. And the Obama administration has been in charge. I think it always is in the second year a referendum.

The reason that one of the reasons historically the incumbent always loses the seats, I think they will lose more than the norm, is because in the president, Americans like divided government. But in a presidential election you don't know who will win. You don't know who will end up in the White House. Here you know who is in the White House. It's a Democrat. If you want divided government, which we do, you want to check and balance, you want to go against the Democrats.

And that's why in the bi-election years, the mid-election year, the incumbent in the White House almost always loses.

BAIER: Quickly, Erin, for the House leaders talking about this, what is their strategy as they head to summer months before November?

BILLINGS: They're concerned about it. They are not going to do a lot of legislating between now and then. They'll try to get financial reform done and maybe some other economic issues that they can throw out there. But they have done the heavy lifting. They don't want their moderates to take anymore tough votes because they are all running for their lives.

They need to get back independents. When we talk about the numbers in Ohio, those are the swing voters that went Democrat two years ago and now are shifting Republican. If they don't get them back they're going to have a real problem holding on to the House.

BAIER: Tell us how you think the president is doing on the economy and jobs. Go to our homepage at FoxNews.com/specialreport. You can vote in our online poll on the right-hand side.

Up next, Guantanamo Bay then and now.



PRESIDENT BARACK OBAMA: To close detention center at Guantanamo is consistent with national security and foreign policy interests of the United States and the interest of justice, I hereby order.

And we then provide the process whereby Guantanamo will be closed no later than one year from now. We will be -- is there a separate executive order, Greg, with respect to how we're going to dispose of the detainees?


OBAMA: We will be setting up a process whereby this is going to be taking place.


BAIER: The White House counsel Greg Craig said they will be setting up a process to close Guantanamo Bay. They didn't. That was January 22.

This is new video from Catherine Herridge just visiting Guantanamo Bay this past week. The situation has changed. They now have PlayStation, board games, Nintendo, libraries, as you see here. And by contrast, convicted terrorists at the Supermax facility in Colorado Springs spend 23 hours a day in solidarity (sic). Take a listen to this quickly:


LT. COL. ANDREW MCMANUS, JOINT DETENTION GROUP GUANTANAMO: They have satellite television. Started out with 14 stations, now have 18 television stations and 11 radio stations.


MCMANUS: They do get sports.

HERRIDGE: They get the World Cup?

MCMANUS: Every day we're taping that -- DVD -- providing it the next morning, they get that. So they're probably watching the World Cup as we go through that.


BAIER: I don't think I was able to watch all the World Cup. This is Gitmo.

We're back with the panel. Charles, some great reporting by Catherine, some startling evidence that they're being treated pretty well at Guantanamo Bay.

KRAUTHAMMER: How do I get two weeks at Gitmo? It sounds really good, weather is good, I get 18 channels, a lot of exercise, and I don't have to work.

Look, when you showed the earlier video of Obama, what is it a day or two after his inauguration signing that, that was true amateur hour. He didn't even know whether there was an executive order for the implementation. They obviously hadn't thought about implementation. He just thought he's Obama, king of the world, just elected president of the United States. And he signed something and it will happen. They hadn't thought it through.

BAIER: I mean, he asked is there a process, is there another order about the process --

KRAUTHAMMER: He didn't even know it at the time. He didn't know it as he signed the executive order.

Look, these guys imagine that Gitmo is an issue, that they were acting entirely on political grounds. Once Obama accepted the principle, which any president has to accept in the middle of a war that some detainees will have to be held until the end of the war, which means indefinite because Al Qaeda is in business and not about to unfurl the white flag, then the issue of Gitmo becomes insoluble. It's either Gitmo or Thompson or going to be a super max in the United States.

BAIER: Thompson, Illinois.

KRAUTHAMMER: The issue remains the same: It's detention without trial, which offends the civil libertarians whether in Gitmo or not.

I think, ironically, by making Gitmo to Camp Med, it probably takes away the intensity of that issue. And probably after a year or two, I don't hear a lot of people clamoring to have it shut, it may go away as a promise that wasn't fulfilled but that not a lot of people care about.

BAIER: Erin, besides the occasional ACLU release, there aren't even from the left up on Capitol Hill a lot of calls consistently about Guantanamo Bay.

BILLINGS: I haven't heard much about it for months. I mean, even Carl Levin said the issue is dormant, the chairman of the Armed Services Committee.

Yes, early on, this was a big issue. I think two things happened. One, there wasn't political will on Capitol Hill to address it from Republicans and from Democrats. And two, Obama kind of shifted to health care. And that was sucking all the oxygen out of the room.

And it's really just gotten pushed to the back burner. You know, as most people are saying now, it's probably not going to get addressed in his first term.

BAIER: Steve, PlayStation, Nintendo, board games -- that gets some people fired up.

HAYES: And those "Eclipse" books. If they were forced to read them it would be tortured, but they're not.

BAIER: "Twilight."


Look, Democrats couldn't be happier to have this out of the public discussion right now. It would be the worst thing for them to be reminded constantly.

President Obama could have handled this issue with the acquiesce of his party if he could have convinced -- it's not just the moderates. It's broad swath -- the broad swath of his party doesn't want to deal with Guantanamo and doesn't want it shut necessarily.

If you look at polling before the 2008 election and afterwards, the independent voters and nearly all Republicans don't want to close Guantanamo Bay. So it's an issue on which the president is not in sync with most of the country and the independent voters he needs.

BAIER: But he doesn't even get flak for saying what he said what he said, signing the executive order, making such a declarative statement that it would close within one year. There's no one checking him on that.

HAYES: Well, this is where I disagree with Charles. I don't think --

BAIER: Besides us.

HAYES: It's not good enough necessarily -- Fox is showing what is going on with Guantanamo now. People watching Fox understand they get the Wii and get the books and can watch the World Cup. The rest of the world, the other networks, who else is covering this? Who else is telling people what is actually happening? Not very many people know that.

KRAUTHAMMER: Our "Special Report" retreat is going to be at Gitmo.


Look, it's not reported, but it's an issue that people understand. It was a mistake at the beginning. Probably, I think people will give Obama a pass on simply not understanding the issue and a little idealism. They'll give credit for it and it will pass. It's not soluble; Thompson isn't the solution and I think it will go away as a political issue.